Monday, October 09, 2006

OPEC output cut

There is a good chance that OPEC will in fact cut its output target for crude oil. Nominally that is a bullish signal for petroleum-based energy products, but traditionally, there is some amount of "cheating" by OPEC member producers, especially when oil prices are fairly high and producers are worried that prices may fall further in the near term.

Yes, the price of crude oil and gasoline could well pop up a bit on any news of an OPEC production cut, but prices are just as likely to resume their decline within days or a few weeks.

Prices are doing a bit of consolidation at current levels, but consolidation is never an indicator of the emerging trend.

-- Jack Krupansky

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